HDFC Ltd. chairman Deepak Parekh said while property prices in some Western countries escalated during the pandemic, it mostly remained stable in India.
He added that any minor increase in interest rates in the near future would have no impact on the demand for home loans.
“In several Western countries, one could see housing prices going up during the pandemic,” he said.
“Part of this problem is that new supply has not kept pace and a large number of housing transactions were purely investment or speculative driven, which led to spiralling of prices, leaving out those who genuinely need homes to live in,” Mr. Parekh said speaking virtually at the CII Real Estate Confluence.
“China, on the other hand continues to battle with issues of over supply and over leveraged developers even though the regulators have now started easing restrictions to encourage banks to lend more to developers and speed up mortgage approvals,” he said.
In comparison, in India, the demand for housing has come from genuine homebuyers, not speculators, Mr. Parekh said.
“Home prices have stayed fairly stable, low interest rates have helped, and the real estate sector has already self-corrected and recovered from its previous down-cycle,” HDFC’s chairman said.
“In short, the Indian real estate market is on an upward cycle, which bodes well for us,” he added.
Reiterating that demand for housing in India continued to remain “extremely robust,” Mr. Parekh said the greatest mark of confidence had been the strong pipeline of new launches, surpassing pre-pandemic levels. “The demand for housing continues to be from both, first-time homeowners as well as those moving up the property ladder – generally into larger homes or houses other locations,” he added. He said housing affordability would not get impacted in the future. “In India as income levels rise, one will see younger people being able to afford housing sooner in life. The trend one is seeing is that incomes are rising faster than real estate prices and therefore affordability should not get impacted,” he said. While certain high-end premium projects had already seen a price rise of 15-20%, barring a few metro cities, prices in the affordable housing segment had been stable. “So, even if certain pockets across the country witness a small price uptick, this can be absorbed. What one needs to closely watch out for is if there is a continued rise in the costs of building materials, which could get passed on to the homebuyer,” he added.